A
report from the Center for American Progress (CAP) predicts the consequences of
growing retirement savings shortfalls could be severe for both American families
and the national economy, as a large share of households may be forced to significantly
reduce consumption in retirement and will have to rely heavily on their families,
charities, and the government for help to make ends meet.

CAP
cites a household survey conducted by the Board of Governors of the Federal
Reserve System, which found that as of 2013, approximately 31% of Americans
reported having zero retirement savings and lacking a defined benefit (DB)
pension. Among respondents ages 55 to 64, the share who reported having no
savings or pension was still 19%, or approximately one out of every five near-retirement
households.

The
report notes that a significant number of Americans still lack access to the
primary savings vehicles used today—workplace retirement plans. But, even among
those who do have access to workplace retirement plans, those who save in them
have failed to accumulate enough to be on track to meet their needs in
retirement.

CAP
says workers should be approaching retirement with greater wealth relative to
their income than did previous generations. The data, however, show the
opposite is occurring.

According
to CAP, the Survey of Consumer Finances (SCF) shows that today, households
across all age groups have wealth-to-income ratios that are effectively
unchanged from or significantly below the ratios achieved by households in
previous decades. Yet, retirement needs have grown significantly in recent
decades.

CAP
cites reports from Alicia H. Munnell of the Center for Retirement Research at Boston
College, which point out life expectancy has increased and the retirement age
for full Social Security benefits has risen to age 67, meaning workers now have
more years of expenses to cover but must wait longer to begin receiving full
Social Security benefits. Health care costs also have risen substantially,
resulting in higher expenditures for retirees, and the decline in real interest
rates since 1983 means that a given amount of wealth accumulated today now
produces less retirement income than it would have in previous decades.

CAP
looked at several assessments of the retirement readiness of Americans, from
the most pessimistic to the most optimistic, and found they all show a large percentage of Americans are not building up sufficient
assets needed to maintain their standard of living in retirement, and the
problem is getting worse for younger generations.

The
studies utilize different methodologies and arrive at different estimates of the
exact percentage of Americans at risk of struggling financially in retirement, but
even the most optimistic, which use prerecession data, still find that
approximately one-quarter of retired Americans are falling short and that
preparedness is growing worse over time. The most middle-of-the-road estimates
available place the share of current American workers at risk at more than 50%,
CAP said.